John Ivison: Lingering tariffs prove USMCA does not mean trade peace for our time

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It isn’t the first time the fighting with the Americans has continued after the peace was signed.

Two weeks after the Treaty of Ghent ended the War of 1812, the Americans were victorious in the Battle of New Orleans. In less dramatic fashion, the U.S. is continuing hostilities on the trade front with Canada nearly two weeks after the striking of the new USMCA — an agreement the Trump administration and the Trudeau government hailed as a deal that will result in “freer markets, fairer trade and robust economic growth in our region”.

Yet as Ken Neumann, the Canadian national director for the United Steelworkers, pointed out in the Globe and Mail this week, the Americans have maintained their tariffs on steel and aluminum exports to the U.S. using Section 232 of American trade law.

The 25-per-cent tariff on steel and 10-per-cent tariff on aluminum were imposed on the dubious basis that imports of those products from Canada pose a threat to U.S. national security.

That Canada signed a trade deal that leaves the tariffs in place is concerning. That the agreement leaves the door open to future use of Section 232 is more worrying still.

Global affairs minister Chrystia Freeland maintained that the modernization of NAFTA and the steel and aluminum dispute were separate issues. Yet the side letters that form part of the deal show that is not the case — Section 232 is now integral to the wider agreement.

One side letter states explicitly that if the U.S. takes action under Section 232, Canada is allowed equivalent commercial retaliation.

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The prospect of more national security tariffs is very real — the U.S. is currently investigating uranium imports, for example.

Trump’s preferred method of dispute resolution is clear. The threat of tariffs on auto exports was forestalled by Canada’s acquiescence to a tariff-free vehicle quota of 2.6 million units, well above the 1.8 million currently being produced.

But on steel and aluminum, the Americans were looking to impose binding quotas far below normal export levels, similar to the 30-per-cent cut of the past three years’ average that South Korea was bullied into signing. To its credit, the Canadian government insisted any cap would have to be higher than current export levels.

But the existence of quotas and caps is …read more

Source:: Nationalpost

      

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